Macro Forecast

Future Drivers 2021

The seven need-to-know drivers of WGSN's Macro Forecast that will transform
industry, business and culture in 2021

Dutch Invertuals and FranklinTill

 Executive Summary
As we approach 2021, understanding and being
able to act upon emerging macroeconomic and
political shifts will be crucial to business survival.
Taking a considered approach to these overarching
shifts is the only way to understand how consumer
desires and spending power will evolve. This will
inform how business leaders innovate to remain
relevant, in what is likely to be an increasingly
challenging environment.
In this report, WGSN identifies the seven global
drivers set to reshape the macroeconomic and
business landscape in 2021, as well as the key
strategies that businesses will need to adopt.
• There will be increased polarisation around
income, with spending power among the middle
class in developed economies continuing to
weaken. However, developing markets such as
those in Southeast Asia will buck the trend.
• Income polarisation is being complicated by the
changing shape of the population in many
countries, with ageing populations in most
developed markets, as people live longer while birth
rates fall.
• Climate change is altering industry and business
in many ways, including the growth of conscious
consumers, new market demographics driven by
migration, and supply chain changes due to
extreme weather events. Businesses will need to
adapt to create new goods and services for this
new world.
• The rising use of material resources will soon
become unsustainable, so brands will need to
evolve to create more circular business models.
• People will become increasingly aware of the use
of their personal data to manipulate public opinion.
By 2021, we will have a more conscious
relationship with our personal data, and this will
necessitate new transactional norms, as people
want to know exactly how their data is being used.
“Change will only be
possible if we collaborate
with others and nurture
entrepreneurship.”
– Torbjörn Lööf,
CEO, IKEA Group
• The rise in micro-communities, combined with
increasing government restrictions on digital
access, is leading to the end of a simple, unified
global internet, and the beginnings of many
fractured networks. Differing beliefs on how
information should be disseminated are creating
walls across the web.
• Chinese consumers will continue to become more
confident in the quality of local brands, and in the
nation's position as a leader in technology, and this
will see local brands create better-targeted domestic
products. International brands in this market will
need to make sure they move at an increased pace,
in order to put local needs at the centre of their
propositions.
 Future Drivers Index
The seven areas of innovation that will transform industry, business and culture in 2021

1 The Great Economic

Divide
5 Datanomics

2 Demographic
Polarisation 3 Climate Change 6 The Splinternet

Adaptability

4 The End of More

7 China Power Shift
 The Great
Income inequality is growing, with the gap between
the wealthiest and the poorest widening. In
developed regions such as the US, Western Europe,
Economic Divide Japan and urban China, middle income groups are
under pressure. Ageing populations and increasing
automation will continue to restrict spending power
and limit confidence. The response will be the
elimination of the middle market with reinvention
and disruption in the value sector. More diverse
value propositions, which are agile enough to
respond to specific and volatile spending priorities,
will win in this environment.
Slowing growth
Beyond issues of social justice, income disparity
matters because it restricts economic growth for
countries with higher median income levels. OECD
economists estimate that rising income inequality
between 1990 and 2000 took nearly nine points off
GDP growth in the UK, and between six and seven
points in the United States, Italy and Sweden.
The middle class in decline
In the US, the middle-class share of income held by
households has decreased since 2015. Almost all
EU countries have seen a decrease in the size of
their middle class, and a decrease in its share of
income since the 2008 global financial crisis. In
Latin America, the growth of
Mark Malta
the middle class has plateaued. Although China’s
middle income group has exploded, its spending
power is vulnerable to the rising costs of urban
living and sensitive to downturns in stock market
sentiment.
Southeast Asia rising
While the developed market’s middle-income
groups are shrinking or seeing their spending power
come under pressure, there is one area of the world
where this group is on the rise: Southeast Asia. By
2030, middle income households – those earning
US$10,000 or more per annum – are forecast to
increase by 51m in Indonesia, 18m in Vietnam, 11m
in the Philippines and 8m in Thailand, according to
the Economist’s Intelligence Unit. This burgeoning
consumer cohort is seen as promising, not just
because of the number of people that will have
more disposable income, but also because the
demographics in the region are favourably young.
New economic stimulus
Trials of a universal basic income (UBI) may have
come to nothing for now, but in its Future Labour
2030 report, management consultancy Bain
concedes that job losses due to automation will
lead to “anaemic demand growth and constrained
economic expansion”, stating that at some point
government intervention is likely.
 Business Opportunities:
The Great Economic Divide
Data will deliver growth
As middle-income shoppers trade down their needs,
the value sector will continue to fragment, offering
up new areas of opportunity to drive growth.
Retailers and brands will need to be able to
segment the customer base into different levels of
spending groups and profiles to capitalise on these
opportunities at speed.
Convenience remains key
Next-generation, financially constrained middle-
income shoppers will seek direct-to-consumer
solutions that offer value, values and convenience.
The D2C market is forecast to grow 11.5% by 2021,
according to Euromonitor, with developing markets
driving that growth. Wellness, beauty and homecare
will be the fastest adopting segments. Given that
the majority of middle-income growth in developing
markets will be in cities, digital solutions that deliver
on price, convenience and lifestyle attitudes will win
out. In the US, the wholesale shopping app Boxed is
an example of a new D2C business attempting to
deliver on all three of those priorities for young
urban consumers.
"I am carrying a mortgage, and a
person who doesn’t have financial
independence should not be treated
as middle class."
- Wei, 29,
Transparency plus value computer programmer, Beijing
Trading around value versus quality will shift to
value and quality. The rise of providing more-for-less
via demystified transparent product offerings – as
offered by disruptive beauty brand Deciem – are
indications of new attitudes towards value from a
customer who is clear-eyed and pragmatic about
budget limitations, more cognisant than ever of
product attributes, and unwilling to compromise on
them.
When creating new propositions in the value sector,
understanding this attitude shift will be key. The
next-generation value consumer will be much less
interested in aping luxury for less.
Automate to invest back into price
Driving cost out of the business via automation will
become necessary for retailers and brands,
particularly those who operate at the bottom of the
market where price alone drives choice. Businesses
will need to consider carefully where the greatest
benefits can be found and when investment needs
to be made.
Exploring - July by Mark Malta
Demographic
Income polarisation between the old and the young
is playing out against a wider macro trend. In many
parts of the world, the population is living longer at
Polarisation a time of falling birth rates. This scenario is starting
to cause intergenerational friction as younger
people are faced with picking up the increased tax
bill for the cost of long-term elderly care.
Governments will be looking to keep older people
healthy for as long as possible to avoid excessive
tax burdens. The opportunity for businesses and
brands is to become the champions and facilitators
of increasing the longevity dividend for ageing
individuals.
Older with less babies
Globally, 14% of the world's nations have a
population in decline and by 2050 that figure will
rise to a third. In China 17% of the population is
aged over 60, forecasted to rise to more than 30%
by 2050. In Japan, more than 28% of the
population is aged 65-plus. In the UK, Australia and
most of western Europe, the pattern is the same. By
2035, there will be 78m people aged over 65,
compared with 76.4m under the age of 18.
Martin Thul
Widening generational inequality
Following the 2008 global financial crisis, European
youth was at greater risk of falling into poverty than
the elderly. In Europe, the median wealth of those
aged 16 to 34 is now just 10% of that of 65-year-
olds. In April 2018, UK think tank Resolution
Foundation recommended that every Brit turning 25
should receive a £10,000 grant to close the gap. In
the US, the median net worth of households headed
by a 35-year-old was $11,000 in 2016, compared to
$224,000 for one headed up by a 65- to 74-year-old.
The longevity dividend
Insurers Fidelity estimate that healthcare fees
during retirement would cost a US couple now aged
65 an average of $280,000. In the UK, two-fifths of
the National Health Service budget is spent on care
for over-65s. In China, a study published in January
2018 estimated that long-term care costs for the
elderly will have doubled by 2030. Keeping older
people fit and healthy for as long as possible will be
a long-term aim for individuals and the state.
 Business Opportunities:
Demographic Polarisation
Identify where real value resides
According to McKinsey Global Institute, the 60-plus
population will generate half of all global urban
consumption growth in developed markets between
2015 and 2030. Overall spending projections for
this cohort are impressive, but many consumers will
still be operating on modest incomes. Seek out the
seams and niches of premium spend, or areas
where you can take out complexity and deliver
simple solutions to everyday problems.
Develop digital solutions that give back control
Deloitte’s 2018 Global Mobile Consumer Survey
found that 77% of UK 55- to 75-year-olds own a
smartphone. With Boomers becoming more
digitally literate, there is an opportunity for
businesses to use technology to help them take
control of their wellbeing. In the US, Walgreens says
20% of its mobile app user base is aged 55 or older,
and 27% of people using Walgreens’ mobile
pharmacy tools fall into the 55-plus demographic. It
attributes this strong take-up
to tools such as Pill Reminder, which allows
consumers to set reminders on their phone to take
their medication. In China, Alibaba has launched a
senior-friendly version of its Taobao app, which has
a larger interface, and can be linked to a relative’s
account so that they can view and buy products for
them.
Senior care is a specialist sector: acquire or
collaborate
In August 2018, Best Buy bought GreatCall, the US Martin Thul
emergency call out and connected health specialist.
Uber and Lyft in the US have both partnered with
care call providers to design a senior-friendly
service, and have adapted their call proposition to
better suit the demographic. “It may well be that in 10
Evolve living environments years’ time the peak age for
Boomers are redefining retirement, so look to productivity is 60 rather than
strategies that help people stay in their homes, with 50. Age may be a drag on per
an increased focus on services. For those looking to
capita growth at the
move into assisted living, ensure that ancillary
moment, but it doesn’t have
services speak to a younger mindset.
to be.”
Ben Franklin, economist, International
Longevity Centre
Climate Change
As businesses adapt to a more conscious
consumer, they will also have to adapt to how
climate change will impact supply chain,
Adaptability availability, real estate and changes in market
demographics due to migration. As shifting
climatic boundaries and extreme weather events
reshape urban areas and communities,
opportunities will emerge to engage these markets
with new goods and services, and for brands to take
a lead in creating design-led solutions.
Investor pressure
Almost 50% of the World Bank’s lending on climate-
related projects in the last fiscal year was for
climate adaptation. The Task Force on Climate
Related Financial Disclosures (TCFD), a group of
leading institutional investors and lenders, is
pushing businesses to reveal their financial
exposure to climate impact, a strong signal the
market will be pricing in climate risk and rewarding
businesses that can adapt.
Supply chain
Sectors with raw materials already under pressure
from climate change, such as coffee and beer, are
acting to ensure they can adapt. Starbucks has a
ten-year $500m investment fund to research into
climate resilient beans, open sourcing what it learns
to spread best practice faster and supporting
adaptation training for farmers via eight centres
across
Dutch Invertuals
three continents. Similar responses to drought and
threats to barley crops can be seen in the brewing
industry.
Urban-led policymaking
With 55% of the world already living in urban areas
(rising to 68% by 2050), cities will lead innovation
and decision-making to counteract flooding, heat
and air pollution.
Climate gentrification and market shifts
In real estate, flooding and intense heat is
beginning to reshape climate-challenged cities. In
Miami, signs of gentrification are appearing in
poorer, elevated areas. Neighbourhoods located
four metres above sea level are experiencing above-
average house-price rises.
In the US, Flagstaff, Arizona, is seeing an influx of
heat refugees from Phoenix and Tucson, confirming
a 2018 World Bank report which forecasts how
internal climate migration will reshape nation
states.
Health and well-being
On a human level, climate change is beginning to
have as measurable an impact on consumer well-
being as economic and political uncertainty has in
the last few years, with psychologists and mental
health professionals referencing climate anxiety as
a growing stress factor.
 Business Opportunities:
Climate Change Adaptability
Become a visible leader
As the market looks to factor in the cost of climate
impact, being a leader in managing the risks will
not only future-proof your business, it will also
deliver reputational and financial benefits
associated with shareholder value, borrowing and
insurance.
Stress test your future
Creating strategic models and scenario analyses of
at-risk regions and communities will give you a
market edge in identifying climate-led shifts.
Don’t go it alone
Invest in R&D and technologies to transform your
supply chain, as well as the processes where risk
exists. Seek out innovators in research and
manufacturing, and collaborate with competitors
and customers to invest in mutually-beneficial
initiatives that will deliver higher industry
standards.
Wrangler, together with the Walmart Foundation,
funded Texas Tech University’s development of a
foam-based process that eliminates 99% of water
used in traditional denim indigo-dyeing.
The CRO will become the new CTO
A hundred global cities now have Chief Resilience
Officers (CRO), integrating policy, sharing
knowledge and driving innovation via public and
private partnerships to manage and adapt to the
impacts of climate change. Introducing this role at
board level amplifies the message and gives
credibility to a brand's goals, both internally and
externally.
Dutch Invertuals
Profit, purpose and protection
Increases in indoor and outdoor pollution, heat
and humidity all present new avenues for design
and development of products and services that
address the physical and emotional impacts of "Understand the societal
climate extremes. The anti-pollution market is impact of your business as
growing fast, with air quality becoming a selling well as the ways that broad,
point in luxury hotels.
structural trends – from slow
Shanghai’s Cordis Hotel has targeted a 10% wage growth to rising
premium on room prices since it attained China’s automation to climate
Reset air standard, which sets healthy limits for
change – affect your
carbon dioxide and other particle pollutants.
potential for growth."
- Larry Fink, CEO, Blackrock
The End of More
As low-impact consumerism becomes more
mainstream and interest in sustainable processes
and products rises, attention will begin to shift to
reducing the amount of new raw materials being
introduced into the supply chain. With global
material resource use expected to more than double
by 2050, and high-income countries currently
consuming ten-times more per person than low-
income countries, we will need the equivalent of 1.7
Earths to maintain our current levels of
consumption. This presents an opportunity for
brands to not only evolve this critical consumer-led
relationship, but also generate estimated cost
savings of €600bn by 2030 in Europe alone.
Going circular pays
The circular economy has been valued as a trillion-
dollar opportunity, and brands that start planning,
researching and innovating now will gain a market
edge with a new breed of consumer more likely to
challenge how a purchase impacts the planet. The
EU’s Circular Economy Mission to India in
September 2018 found that the reducing resource
depletion could “unlock $0.5 trillion for India by
2030”.
The closed-loop sourcing advantage
Replacing linear supply chains with circular
resource models not only negates the need to
introduce new materials into the manufacturing
Martini Studio
process, but also the volatility in pricing that often
affects commodities. This also fosters innovation –
IKEA is creating new product ranges from its waste
materials and French multinational Danone has
created a stand-alone department for researching
and developing processes to reuse manufacturing
by-products and manage the “second life of
packaging”.
If you make waste, use it
Unavoidable waste, both natural and industrial,
should be treated as a valuable resource. The
excrement economy is a growing market, where by-
products are being turned into biofuel to create
energy. From Veolia’s waste-to-energy facility in
Perth, Australia, and the Bill Gates Foundation-
backed Omni Processor, a low-cost device to
process sewage, this market is projected to be
worth $43m by 2023. On a smaller scale, Etat Libre
D’Orange’s 2018 I Am Trash fragrance was made
using an upcycled extract process that distils oils
from previously used organic material.
Grow your own
Be inspired by the resurgence of young designers,
particularly in emerging markets, who are drawing
on traditional techniques and creating new bio-dyes
made from local flora.
 Business Opportunities:
The End of More
Set achievable goals
Unilever’s zero-waste-to-landfill target, covering
more than 240 manufacturing plants worldwide,
was achieved six years ahead of schedule, at the
end of 2014, and netted financial benefits of €200
million in savings and cost avoidance. By 2020 it
expects all of its electricity to be from renewable
sources, in pursuit of a 43% cut in greenhouse gas
emissions. And on water, Unilever has cut its
absolute usage by 20% since 2008, partly through
the deployment of 35,000 sensors and use of big
data analytics and exception alerts across more
than 90 of its global sites.
Make reuse part of your identity
Reassess processes that produce waste and where
it is unavoidable, make use of it. IKEA's SKRUTT
desk pad is made from 50% recycled material and
its KUNGSBACKA range of kitchen fronts, made
from recycled PET-bottles, was launched in 2017.
Creating product through a zero-waste policy is a
powerful message to consumers about your
brand's commitment to sustainability.
Loyalty through circular initiatives
Partner with second-use platforms, such as
thredUP, to encourage recycling by offering
incentives for unwanted products. Sustainable
fashion label Reformation announced it had signed
up to thredUp's Upcycle programme in October
2018, offering store credit in exchange for
unwanted items. In 2015, 73% of global material for
clothes was sent to landfill or incinerated and the
textile industry's consumption of oil is projected to
Lucy Hardcastle
rise to 300m tonnes by 2050.
Start radical collaborations for good
Despite being fierce high-street rivals, Starbucks and
McDonald's are working together to develop a
compostable and fully recyclable cup. The Nextgen "This take-make-dispose
Cup Challenge is an open-source platform designed model not only leads to
to identify scalable solutions to replace the current an economic value loss of
fibre-based hot and cold beverage cup. The over $500bn per year, but
evaluation criteria asks "How might this solution also has numerous
make life better for users, businesses and the
negative environmental
world?" and states that "solutions should seek to be
relevant across the entire food service industry, and societal impacts."
rather than exclusive to one product or business
type." - Ellen MacArthur, founder,
Ellen MacArthur Foundation
Datanomics
The shift from an unconscious to a conscious
relationship with personal data will drive new
transactional norms, transforming business
systems and processes. As more individuals
actively decide how their data will be used, better-
quality structured data assets will be created,
fuelling innovation and the opportunity to deliver
more relevant solutions to customers.
Consumer control
The use of data to manipulate public opinion,
together with personal data breaches, will
encourage policymakers to check its power.
Following the launch of GDPR in Europe in May
2018, Brazil passed the new General Data Privacy
Act in August, while in the US, California agreed to
introduce the Consumer Privacy Act (CCPA) by
2020, which will give individuals the right to
download and port personal data from one
platform to another.
Beyond global regulation, there is a growing public
debate around how individuals should be
compensated for the use of personal data and the
value it creates for businesses such as Facebook,
Amazon and Google. In May 2018, Dutch activists
founded the Datavakbond, a data labour union,
whose collective aims include seeking
compensation for commercial use of personal data.
Elias Klingén
Data as currency
The growing realisation that the digital data we
create is a commodity to be bought and sold will
drive the growth of data as currency. Start-ups are
looking to create currencies that can be traded for
data – users of the Sweatcoin app collect one
‘sweatcoin’ for every 1,000 steps they take and can
redeem tokens against a changing range of
incentives.
Next-generation data brokers
As regulation enables individuals to decide where
their data goes, a new generation of brokers will
emerge – such as the San Francisco-based
Datawallet, a consumer-to-business data
marketplace – offering incentives to individual
sellers and crafting more bespoke data sets for
business buyers. Wibson, another start-up player in
this space, launched in October 2018 in Spain,
Argentina and the UK.
Blockchain is the enabler
The decentralised, transparent and generally secure
characteristics of blockchain technology will enable
individuals to host their personal data in controlled
environments, allowing access by use of a
cryptographic key. US start-up Hu-manity.co, for
example, is an app which enables users to host and
unlock specific areas of their health data, and sell it
to researchers and pharmaceutical companies.
 Business Opportunities:
Datanomics
Transform loyalty
Blockchain-enabled loyalty schemes will develop
fast once early movers have proved value. Start due
diligence now to ensure you can capitalise on the
opportunities to provide better customer experience,
rewards and cost savings. Singapore Airlines
loyalty programme is now hosting its scheme on
the blockchain, and Rakuten, Japan’s online
marketplace, has announced it’s converting its
$9bn Super Points programme into Rakuten Coin.
Beyond individual programmes, blockchain start-
ups such as Incent are testing data marketplaces
allowing tokens to be shared, gifted and traded.
These are all behaviours native to Millennials and
Gen Z. Brands should incorporate trading and
cross-brand sharing into schemes and monitor
marketplaces for learnings and future partnerships.
Create trust and carve out differentiation
Reset the relationship – the customer is your
collaborator. Put customers fully in control of their
data via a clear, concise dialogue in your own tone
of voice.
"Change becomes
inevitable as soon as most
Use this new collaborative relationship to build people decide that they
personalised products and services that enhance own their own data."
your value proposition and create mutual benefit - Robin Bloor, chief strategy
and reward. Think about what tools and officer, Permission.io
platforms you might want to create to do this.
If you are a brand with cause and purpose at the
heart of your proposition, create opportunities to
collaborate with your customers to use the value
of their data as a force for good. This will reinforce
shared values and further cement your
relationship.
Become the broker
Businesses with access to large amounts of
customer data are already setting themselves up
as data brokers to access new revenue streams.
UK mobile network Three recently announced it
would sell data on customer age, gender and
approximate location to potential advertisers
whenever it has consent to do so. This approach
comes with a caveat around customer trust and
market sentiment but may be an option for some
businesses.
Elias Klingén
The Splinternet
As we track the rise in micro-communities,
increased localisation and polarisation, and
increased governmental restrictions on digital
access, we are seeing the end of a single, unified
global internet and the beginnings of many,
fractured networks. Even the man who created the
world wide web, Tim Berners-Lee, acknowledges that
the internet has reached a point where it might fork.
He used a keynote at 2018’s Web Summit to launch
a “contract for the web” to preserve a “free and
open” internet (to date, both Facebook and Google
have agreed to sign up to the charter, but Amazon
hasn’t). “Those of us who are online are seeing our
rights and freedoms threatened,” he said.
Data polarisation
Legislation is already affecting local access. The
EU's General Data Protection Regulation (GDPR)
means that European users cannot visit US-based
non-compliant sites. Currently, the EU is pushing for
its “Right to be Forgotten” privacy standard to apply
not just to the 28-member bloc, but to the entire
global web, which would trigger an ideological
conflict between EU privacy laws and US
constitutional law that protects freedom of speech.
Political pressure
With over 620m online users, China is projected to
become the world’s largest digital economy
Audry Large X LESS by Dutch Invertuals
& FranklinTill
by 2020. However, content and access is tightly
regulated. Similarly, Iran’s National Information
Network denies access to information it considers
unlawful, while throttling performance speeds for
any content not on a list of 500 government-
approved sites.
The decentralised web
Also known as the DWeb, this blockchain-based
internet model effectively removes the need to rely
on third-party power brokers – such as Facebook
and Google – and returns ownership of data back
to users. “Let’s build a decentralised web, let’s lock
the web open for good, let’s bake in our values, let’s
make freedom of the press irrevocable, let’s build a
system we can depend on, a system that doesn’t
feel creepy,” said Brewster Kahle, founder of the
Decentralized Web Summit, in August 2018.
The web 3.0 in beta
Mozilla, creator of the Firefox browser, has already
released early-stage tools for building DWeb apps.
Tim Berners-Lee launched his own open-source
project, Solid (derived from “social linked data”), in
October 2018, to develop “the new internet”.
 Business Opportunities:
The Splinternet
Go beyond compliance
GDPR and privacy legislation requires that you have
a robust and sustainable security strategy.
Complying with new regulations is an opportunity
to assess your IT infrastructure's ability to cope with
data breaches. It's also an opportunity to re-
evaluate your company's relationship with data –
compliance is the minimum requirement, but how
do you view your customer's data beyond that?
They are becoming more conscious around how
their personal information is used commercially.
More than one internet
The Chinese internet may differ from the one the
Western world is familiar with – there is no
Facebook, Twitter or Google – but remember that
this is all a generation of Chinese consumers know,
having grown up with domestic platforms like
Baidu and Weibo. This trend is likely to continue as
China begins spreading this controlled model to
other countries, including Tanzania and Vietnam.
Online strategies will have to quickly adapt to keep
pace.
New strategies for a new web
To most legacy companies, a decentralised internet
will be a terrifying prospect, but using the
emergence of the original world wide web will
provide strategic context. Was your brand an early
adopter of e-commerce or did it react only as
mainstream use took hold? What would you do
differently if you had that opportunity again?
Adopt a long-term view that will allow you to be
flexible and adapt at speed. Make sure your
planning teams monitor potential new markets as
they emerge and know how to navigate local
restrictions.
E-commerce evolves
We are already seeing start-ups that are creating Audrey Large
tools and platforms for decentralised
marketplaces. ApolloX has created a token-based
ecosystem for e-tailers, which it will begin testing in
April 2019, with a planned 2020 roll-out. Gambio
launched GAMB (Global Alliance of Merchants on "I no longer feel like a player, I
the Blockchain) in July 2018, which sellers can join feel like I’m being played."
if they hold its GMB token.
- Brewster Kahle, founder,
Decentralized Web Summit
China Power Shift
China's confidence as a leader in technology and
brand creation will continue to grow, resulting in a
shift in the impact of its influence in the world. That
confidence will bolster Chinese businesses to create
better targeted domestic brands for local
consumers. As the Chinese consumer becomes
more satisfied with local choices, international
brands will need to rethink their market approach,
putting speed and innovation at a local level at the
heart of any business's market proposition.
Leading from the front in AI
A focus on artificial intelligence and blockchain
technologies will see China lead the world in these
areas. In 2017, it submitted four-times as many AI-
related patents and three-times as many blockchain
and crypto-related patents as in 2016. China
currently owns the largest share of global
supercomputers– essential for analysing the huge
amounts of data that enables advanced AI. China's
human resources in this area are also likely to put it
ahead of the rest of the world, the number of STEM
graduates leaving university every year in China
currently outnumbers the USA by eight to one,
according to the World Economic Forum.
National brands on the rise
Chinese consumers will continue to rebalance their
appetite for global and national brands as trust in
products created in China grows. In the FMCG
market in 2017, local brands grew by
John Yuyi
7.7%, taking 98% share of all growth, while foreign
brands increased by just 0.4%.
Two other 2018 surveys indicate that shoppers are
starting to take more satisfaction in local brands in
certain categories. Prophet's 2018 brand ranking
index for China revealed that domestic brands are
continuing to gain popularity. And in Credit Suisse's
2018 Emerging Consumer Survey national brands
were making headway in food and beverage, home
appliances, personal care and electronics. In home
appliances, for example, 91% of 18-29 year-olds
preferred national brands to foreign alternatives.
Heading up the world's biggest single trade block
The world's biggest single market will be created by
the Regional Comprehensive Economic Partnership
(RCEP). This free trade agreement between 16
APAC nations was due to be signed In November
2018 but final negotiations were pushed forward
into 2019. Once signed, it will create a customs
union between ASEAN countries, including the fast-
growing markets of Thailand, Philippines,
Cambodia, Vietnam, Indonesia and Malaysia,
enabling China to benefit from frictionless trade in
goods and services. This harmonising across
borders is likely to see the export of some of China's
ecosystems.
 Business Opportunities:
China Power Shift
Commit to the market
International brands at all market levels and across
categories will need to review their infrastructure in
China to maintain and grow their market position.
New entrants will need to carefully assess what
level of commitment they will need to make an
impact in a market where the local incumbents are
becoming increasingly sophisticated and agile.
Scale and global recognition are no advantage over
pace and local knowledge in a rapidly changing
market where consumer aspirations are constantly
evolving.
Local R&D
Investing in local market research and development
facilities to support new product development and
build in an ability to test and learn will be
key. Alibaba Group’s Tmall has partnered with
beauty firm L'Oreal to leverage data-driven
consumer analytics to better localise product
development and marketing strategies across
China.
"I think AI should support
human beings.
Technology should always
do something that
Growing importance of city clusters enables people, not
China's consumption growth in the next decade will
disable people."
come from the growing power of its city cluster
networks. The government has identified 19 city — Jack Ma, co-founder, Alibaba
clusters, geographical group of cities networked Group
together to speed their development, forming
regions that can thrive off each other. By 2020 there
will be 12 more intercity railway lines connecting
these city clusters, with another nine lines planned
to come on stream in 2030.
An AI powerhouse
Artificial intelligence is opening up new market
opportunities in key lifestyle sectors. A top
investment area for AI in China is in health and
wellness, with diagnostics a major focus. China has
a shortage of doctors and its population is ageing
rapidly, so solutions need to be found for efficient
health and wellness monitoring. The Chinese tech
giants have access to huge amounts of personal
data, opening up opportunities to bring innovative
new businesses to market via collaboration.
John Yuyi
 Research Matrix
Great Economic Divide The End of More
The Collision of Demographics, Automation and Inequality UN: Assessing Global Resource Use
The World Inequality Report 2018 Mapping the Benefits of a Circular Economy
Trends in Income Inequality and its Impact on Growth Achieving ‘Growth Within’
Middle Class Fortunes in Western Europe The New Economy of Excrement
Inequality and GDP per capita: The Role of Initial Income
Datanomics
Middle Class: Winners or Losers in a Globalised World?
Making blockchain real for customer loyalty rewards programs
Demographic Polarisation Me, Myself & I: The Individualisation Imperative
A New Generational Contract The Rise of the Personal Data Broker
A wider partisan and ideological gap between younger and older
generations The Splinternet

2018 Global Human Capital Trends Splinternet: Do Data Localisation Laws Threaten the Global Internet?

Financing elderly people's long‐term care needs: Evidence from Making China Great Again
China
China Power Shift
Climate Change Adaptability PWC Global Consumer Insights Survey 2018
Task Force on Climate-related Financial Disclosures: Status Compumark Chinese Brands Go Global 2018
Report
Prophet Brand Relevance Index 2018 China
Disaster on the Horizon: The Price Effect of Sea Level Rise
China's Evolving Consumers: 8 Intimate Portraits - 2018 Earnshaw
Climate Change in 2018: Implications for Business Books
Redrawing the Map: How the World’s Climate Zones are Shifting
DEFRA: The National Adaptation Programme and the Third
Strategy for Climate Adaptation Reporting
 The Macro Forecast
We've revamped our future trends programme to better align with the way you work.

Listen to WGSN's head of Macro Forecasts, Lisa

White, for more information about this new content.

Future Drivers 2021
Annual – November
NEW REPORT - The global macro-
economic drivers that will shape 2021,
and strategies for success.
Future Consumer 2021
Annual - January
An in-depth look at the consumer drivers,
priorities and profiles that will emerge, both
globally and regionally.
Future Innovations 2021 Big Ideas 2021 Trend Concepts 2021
Annual – November Annual – January Seasonal – A/W: October
S/S: March
What used to be known as The Vision will now These reports will be published once a
be published once a year, with strategies for a year, with ideas distilled from our Trend Concepts (formerly called Forecasts)
12-month period. Future Drivers and Future Innovations will present seasonal design directions, two
reports, contextualised for the following years ahead of market.
Future Innovations will outline the 12 areas industry segments:
that will lead transformation across industries
in 2021. These will feed into our Big Ideas and Textiles Denim
Colour and materials reports will not be
thematically trended, while fashion,
Trend Concepts reports, but these reports will Women's Footwear interiors, and beauty will be trended into
no longer be thematically linked. Men's Accessories three themes per season. There will be
Kids' Beauty
more than 40 reports published twice a
Active Intimates & Swim year.
Lifestyle & Interiors

Insight Only All Platforms Fashion / Lifestyle & Interiors Only

◀ ▶

Business Strategy Product Design

Powered by TCPDF (www.tcpdf.org)